Kansas Attorney General Derek Schmidt had one overriding message Monday when he addressed members of the Hillsboro Evening Lions Club — the best ways to avoid financial scams and fraud are awareness and prevention.
“We get somewhere between 7,000 and 8,000 complaints a year from Kansans,” Schmidt told club members. “The reality is once that money is out on the wire it’s really unlikely we’re going to be able to find it and get it back.”
Schmidt described several common deceptions investigators in his office have encountered during his 10 months as attorney general that target the elderly in particular.
The ‘grandchildren scam’ is a ploy in which a person claiming to be someone’s grandchild uses the pretense of a personal emergency to request financial assistance, Schmidt said.
“Grandma or Grandpa, this is Sally or Joe — I am travelling. I’m on a trip right now, and I just got mugged, or I lost my wallet,” Schmidt said. “Could you wire me $500 so I can get my train ticket, plane ticket, rental car, whatever it is, so I can get home?”
The availability of personal information on the Internet gives scammers added authenticity when attempting this deception, Schmidt said.
“They’ll go out on Facebook, or MySpace, or LinkedIn, or one of the social networking sites, where a lot of folks, particularly younger folks, have lots of information about themselves out there,” Schmidt said. “They’ll pick up a few tidbits, like how many brothers and sisters and what their names are, what their parents’ names are, where they live, what school they’re enrolled in, names of pets, all those sorts of things that they can just drop in the course of conversation to make an otherwise not credible ploy sound credible.”
Suggesting a conversation with the caller’s parents before agreeing to help is an effective way to counteract this type of fraud, as the caller will inevitably resist and then hang up, Schmidt said.
In the spring and summer, complaints involving roving contractors and transient merchants become more common. Schmidt said primary targets of this type of scam are single elderly people in rural communities.
“They will almost inevitably target homes where an older person lives alone,” Schmidt said.
He used the example of a traveling asphalt contractor that does one or two quality jobs in a town to establish a good reputation before implementing their scheme.
“They know that in small towns people talk to each other, and so they want the word to go around town that these guys are pretty good, they were alright,” Schmidt explained. “Then what happens is the quality starts to go down, and the price starts to go up. And usually the fact the price is going up isn’t disclosed up front.”
The contractor will provide an initial cost estimate for the proposed work, and then increase the cost after completing the work, claiming they encountered problems to justify the increase, Schmidt said.
While these types of fraudulent activities taper off in the fall, the upcoming holiday season sets the stage for an increase in charity telephone solicitation scams, Schmidt said. Callers may make compelling appeals for recognizable groups such as police and firefighter organizations.
“There’s nothing inherently illegal about that type of fundraising, assuming they are properly registered as a professional solicitor, but you’ll almost always find that a very high percentage of each dollar goes to the fundraiser and not the charity,” Schmidt said.
“Nationwide the average is about 15 cents on the dollar goes to the charity, and the balance goes to the solicitor,” Schmidt said. “If I want to give money to a local charity, I want it to go to the charity, not some professional fundraiser that’s in Springfield or New Jersey or wherever they may be.”
Schmidt offered simple advice to the group for dealing with these calls.
“If you’re feeling magnanimous, thank them and hang up, and if you’re not, just hang up,” Schmidt said. “If you want to support the sheriff, call the sheriff and offer to give a donation locally.”
Schmidt turned his attention next to the use of e-mail schemes to defraud people.
“There are a thousand different scams that bounce around the internet,” Schmidt said.
Schmidt paid particular attention to what he termed the “hello, I’m your bank” e-mail scam, which lures people into providing bank account numbers, Social Security numbers, debit or credit card information, and other personal information.
“It appears to be from your bank — it’s a customer notice of some sort or all sorts of personal information has been stolen, and yours may be at risk,” Schmidt said. “Of course, it’s not from your bank, they don’t have your information, but they will as soon as you click on ‘confirm,’ which they will then use to go to your bank and access your account to pull money out of it.”
Schmidt strongly urged listeners never to respond to these types of e-mail.
“The bank won’t contact you that way — if there’s a breach, they will call you, they will communicate with you by letter, and they are not going to send you a random e-mail.”
One challenge Schmidt faces in combating consumer fraud is the reaction many people have when they discover they have been the target of a scam.
“Frankly, folks get embarrassed they got caught, and they don’t ask for help because they don’t want people to know they just got snookered,” Schmidt said.
“If you think you’ve got a problem, ask for help — that’s what we do. Ask us, ask family members, ask the local police,” Scmidt said. “We’d much rather help early than try to help late when the odds are not so good.”